Show Notes

🆓 Did doorbuster giveaways on the Korean exchange Bithumb bring volume that artificially held the price of BTC at $6,000?

🚙 Our new game show “Would You Trade Your Car For 1 BTC?”

Transcript

Aaron: Jay, back in the cave after a notable remote access period, here.

Jay: Yeah.

Aaron: How does it feel to be back?

Jay: Good. It’s good to not be in the cave I was working in in Industry City that was making the sound quality bad for several months.

Aaron: Yeah, we apologize to all the listeners for that. We also apologize to all of the listeners for launching this show at maybe … if you have been buying Bitcoin along with this show, you have not done well on that.

Jay: You might be broke.

Aaron: Yeah. If we launched a year earlier, we could have said, “Well, yeah, but come on. Your entry was under $1,000 Bitcoin.”

Jay: Yeah.

Aaron: I believe our entry … we started this show almost a year ago now. Bitcoin was racing towards $10,000, I think, when we started this show, right?

Jay: Yeah, I think it was our fourth episode or something when Bitcoin, while we were doing the show, crossed 10,000, right? For the first time.

Aaron: I guess, maybe that was before we launched the show.

Jay: Was it?

Aaron: I dunno, it’s hard to remember [crosstalk 00:02:05] all of this stuff because we were taping episodes before. We’ve been touting for a long time that there is a line in the sand and that I thought we would never reach it. I think you jokingly just called out a number, I believe that number was 3,300. That’s unofficially been The Kang Line for at least six months, if not, longer.

Jay: For a long time, it was the way in which you had asked, or when some of our crypto friends would ask, “Why are you not in Bitcoin?” I would say jokingly, “I’m waiting for Bitcoin to crash to 3,300.

Aaron: Yeah, I think it was your dad’s idea originally [crosstalk 00:02:45].

Jay: … Was 3,000.

Aaron: 3,000?

Jay: Yeah.

Aaron: Okay. So you wanted to catch … you were gonna try and catch your dad there on a little bit of a squeeze.

Jay: Yeah, exactly. I think maybe, also, I misremembered what he had said, but he definitely said 3,000, but when Bitcoin was at 9,000, when it was at 6,000, I never thought that we would approach this line this quickly.

Aaron: So you’re not actually gonna stand behind The Kang Line. Because right now, you could be like, “Oh, I always knew this was gonna happen.”

Jay: I could say that, but you and I both know that that’s a lie.

Aaron: You were always throwing cold water on my [inaudible 00:03:28], so in your mind, what was the worst it could get?

Jay: Oh, I don’t think we’re anywhere close to the worst it could get. I think the difference in our perspectives in crypto, is that you feel like there should be … and I don’t know who’s right, honestly … that you feel like there needs to be some sort of stabilization that is above the price that we’re at right now, right?

Aaron: I think so, yeah.

Jay: That there is enough organic interest in crypto and that of all the people who are converted to crypto in the past year and a half, that some of those people have really sincere interests in the future of crypto currencies, and that they’re gonna build things and that Bitcoin will continue to improve, that geopolitical events will take place that will maybe increase the speculative value of Bitcoin again, and that all these factors could happen and it only takes one or two of them to shoot the price back up.

Aaron: I would say all those factors are almost inevitably gonna happen. Whether they will shoot the price up, I don’t know because if you’d asked me a year ago, and said there was gonna be a mass sell off of American tech stocks, like everyone’s gonna fucking shit the bed, [crosstalk 00:04:42] I would have been like, “That’s great for Bitcoin. That money’s going straight into Bitcoin.”

Jay: I also would have thought that was impossible too, that Apple and that Amazon and some of these blue chip tech stocks would all get crushed.

Aaron: I think I agree with all the things you just listed, except my faith is a little shaken that they all point down Bitcoin Avenue and I’m starting to wonder, all of those things during a bullrun would push the price up. Right now, it feels like nothing would push the price up. I’m wondering where all these sidelines buyers were. Maybe they were all at The Kang Line … maybe The Kang Line is more influential than we think. What if all the institutional money was like [crosstalk 00:05:30] send it right along The Kang Line, because I will say, I think this was two days ago now … we’re taping this on a Saturday, so I think it was Thursday we printed and I think it hit 3,200, maybe, was the low?

Jay: Yeah, somewhere around there.

Aaron: But it was only under 3,300 for like, a breath. It’s bounced around there, but it’s never gone way below 3,300, so if everyone was thinking they were gonna buy at 3,300, that does seem like what happened so far.

Aaron: You never know who’s listening. [crosstalk 00:06:11] sponsors of the world.

Jay: My perspective on it was not that those things wouldn’t happen, my perspective on it was always that the confluence of events and coverage and hype that happened in 2017, that the air in it was much bigger than I think you or some of our other friends thought, and that I felt like there was no reason for it to not crash down to even like, $1,000, say, or even less.

Aaron: And there still isn’t.

Jay: And there still isn’t. I couldn’t think of a compelling reason why it would be worth any specific number. Why would it be worth $5,000 and not $800? It doesn’t change the fundamentals of the technology, or whether or not it’s going to be used in whatever, but it does kinda mean that it’s hard to pinpoint an entry price. So, yeah, 3,300 was totally arbitrary and the reason why I picked it was partially because my dad said he would buy at 3,000, but also because I felt like it was so low at the time. When Bitcoin was like [inaudible 00:07:17] when Bitcoin was at like, 11,000, 9,000, all of that, it just seemed difficult to believe that it would fall this low. But now that we’re here, I would say that after having been a man of my word, because I know that there were a lot of skeptics that I would even buy at The Kang Line, I did.

Aaron: There was a lot of discussion about it because Jay did start wavering on The Kang Line and I will say, the buy was smaller than I expected based on the fact that we’re literally talking about someone who has gambled on eSports. And I don’t mean like, gambled pennies on eSports, I mean gambled competitively with significant chunks of money on eSports. But, you did buy 3,300 and I understood the psychology. [inaudible 00:08:11] the top of the bullrun, my God. Really, this is cheap. To me, now, today, I’m like. “Down this far? Is this really the time?” Because it feels like if you were like, “Okay, this is my entry point,” psychologically, I probably would have felt that way. 6,000, I would have felt that way. 4,200, now we’re getting down to a 3,300 point, I could very easily believe 1,800 now, why not?

Jay: Yeah, why not? It could go down to like, $60. There’s no bottom for this because as everyone points out, there are no fundamentals. There’s no assets that the company is holding. It’s not like my former place of employment vice where at some point, they at least own that building.

Aaron: But there are fundamentals in the sense that Bitcoin is an operating functional system.

Jay: … in terms of things to buy.

Aaron: I would agree with you more about some of these Altcoins. Some of these Altcoins are like, once they’re gone, they will leave no ash upon this earth. It’s unclear whether they’ve ever had an office, an employee, if someone’s even use their real name while working as a developer on them. Bitcoin, we know fundamentally the Bitcoin network still works. You can still do transfers on it. There’s actually a pretty significant hash rate considering most of the people who are mining at that hash rate are losing money doing so.

Jay: I know.

Aaron: So if anything, I think the fundamentals of Bitcoin right now, are stronger than they were at the top.

Jay: I don’t mean fundamentals in the sense that the technology of Bitcoin. I’m more saying that when you are taking a company, for example, and gutting the company, the company dies. There is a floor to where there is some asset that you can sell. For example, there might be a building they own or there might be a to of office equipment. There might be chairs that you might be able to sell.

Aaron: I mean, that’s a pretty trivial amount of money. I feel like most businesses that are going under, are going under in a significant amount of debt.

Jay: Sure. no I agree with that.

Aaron: Usually debt is a part of the story of a big fall, like debt coming due, debts that are not gonna be made, start thinking about bankruptcy, [crosstalk 00:10:39], structuring, how you sort of crash down.

Aaron: This just feels like that weird feeling of parabolic in two directions, where it’s like-

Jay: What’s the other direction?

Aaron: Up?

Jay: Oh, oh yeah. So you feel like we’re going parabolic down right now.

Aaron: Kind of yeah. I mean, we’re doing it in these jumps, they feel pretty arbitrary, to a person who’s normally … like normally when you’re like, “Okay, how much is this worth? How much is Apple worth?” Then it’s like, okay, iPhone sales are weak. They’re worth like 10, 20% less, it’s sort of incrementally moving and it feels like Bitcoin is only gonna move in these mega chunks right now. It just feels weird because I don’t … right now, we tested close to 3,000. When we were sitting at 6,000, which was not a comfortable position either, doesn’t the fundamental situation of Bitcoin and the world feel that different between now and then?

Jay: No, and it’s lost half it’s value.

Aaron: Yeah, it just feels very arbitrary.

Jay: Yeah, it took a massive dump. I don’t even remember the path down.

Aaron: We actually got … you sent me what I think was the first explanation of that drop below 6,000. I think that was the biggest … if I think back on the whole time down from the all-time high, when 6,000 broke, that was the most surprising to me and I think it was maybe like the knife in the back. It really hurt. It really hurt.

Jay: Really?

Aaron: Yeah, but it hurt me personally and also, I feel like it was the first time I started seeing some cracks in the armor of the true believers just a little bit, where people were like, “Whoa.”

Jay: Yeah, that’s true. The tone did shift a little bit. That’s when everybody started being like “Buidl”

Aaron: I think people were talking about budding at 6,000. They were like, “During a bare market, the true people know that it’s all about budding,” then 6,000 broke and it was like, is this just a bare market anymore?

Jay: Yeah, or is this thing useless?

Aaron: It is ultimately just a bare market, but you have to have sort of taken a breath after dropping off of that 6,000 cliff and been like, “What’s happening?”

Jay: Okay, so what’s this explanation? Is it-

Aaron: The explanation is from one of our favorite topics on this show; Korean exchanges. We’ve always known that Korean exchanges were lurking out there. You were always of the belief that Korean Ethereum markets were massively manipulated.

Jay: Yeah, I think that’s a fact.

Aaron: We talked a lot. I think we talked on the second episode of this show about how there’s often a massive spread with Korea and that Korean trades, I believe it’s referred to as the Kimchi Premium?

Jay: Yep, it was like, what? 15% higher or something like that, right?

Aaron: Yeah, pretty consistently as it went up, you started seeing these really wild spreads and we talked about potential causes for those. But it means, I think, that the Korean markets are often leading the way up and down and people are looking to them as to where are we going? What’s the next move here? So, basically, as I understand it, Bithumb … is it Bithumb or Bitthumb?

Jay: I think it’s Bithumb.

Aaron: But what does that mean? It’s spelled thumb. Is that a word in Korea? Humb?

Jay: Bithumb … I have no idea.

Aaron: I think it’s Bitthumb, but they didn’t put that extra t in there.

Jay: I don’t think it is. I think it’s Bithumb.

Aaron: Okay, we’ll agree to disagree, but I-

Jay: Because they don’t speak english in Korea.

Aaron: Out of respect for your cultural heritage, I will call it Bithumb.

Aaron: So, Bithumb was not the top player in volume. Even though it was leading, it wasn’t the top player in volume. Then Bithumb’s volume, particularly around this 6,000 level, spiked to where they jumped up the charts and I think were showing the top volume … I’m not necessarily saying the Bitcoin markets, but just overall top volume. So they were like, “How did this happen?” They did a series of promotions, I think one of them was called the Super Airdrop Festival or something like that?

Jay: I think it was called the Airdrop Festival.

Aaron: Okay, Airdrop … the Super, I just added. The Airdrop Festival. So basically, they were doing their own coin giveaways and that was driving a lot of people to come on Bithumb and that was creating a bunch of volume. This is the thing I didn’t understand before. There’s more volume on the way up than on the way down. During the bullrun, lots and lots and lots of volume, that’s a sign that prices are going up, people are coming on, they want to trade. Generally the down flow is low volume, people just letting price gradually drift by not trading, not buying, and selling.

Aaron: So basically, the volume supplied by the Airdrop Festival was one of the things that helped hold the $6,000 line. Then the day that promotion ended, it dropped off the cliff.

Jay: Oh. You and I and a lot of other people were puzzled all the time by why Bitcoin was holding so steady at 6,000, right?

Aaron: Absolutely. It was like-

Jay: It was like, months.

Aaron: If this is gonna be the bottom, people usually buy the shit out of the bottom and it’s there very briefly. We had this contradiction where we were like, “We think this is the bottom, but we’re stupid and clearly no one’s buying it up or we’d be at 7,000.”

Jay: So it was all driven by … or this theory at least says that it was driven in large part by the fact that Bithumb, which is, I think the biggest Korean exchange, and which made a shit load of money during the bullrun, that they were basically just doing like a Cyber Monday sale-

Aaron: Pretty much.

Jay: … For a few months and just giving away Bitcoin.

Aaron: And other people were basically looking at, let’s say the foot traffic, on their like, Black Friday sale and saying, “Oh, well it looks like there’s increasing volume on Korean exchanges, which often lead the way. I’m not gonna sell my 6,000 while Korea is surging.” That sort of looks like the beginning of it. Except the minute they turned off the sale, all these people just bounced because they were only there for … I think the Airdrop was for, like Bithumb’s own thank you token or something. It wasn’t for something good.

Jay: You know what? I think two things about this. The first is that I don’t deny that this story … this story sounds right to me, but then it also is hard to believe that-

Aaron: You’re literally a Korea expert also. Literally.

Jay: It’s my birthright. It’s hard to believe that a small amount of free tokens would lead to this amount of swings in volume.

Jay: Yeah, no, but then I was thinking about our episode about Initiative Q.

Aaron: Initiative Q. By many metrics, Initiative Q is the most successful cryptocurrency, though it is not a cryptocurrency.

Jay: How many people just sign up because it’s free money? Or they see it as free money and in a country that I would say more than any other country, got completely wrecked, where there were more people that got wrecked, and who is more crypto crazy than any other country, maybe these types of giveaways were that a lot of people in Korea also thought that they were gonna be the beginning of the end. Why not take some free cryptocurrency and hope that things resurface? I’m sure that I would have done it, wouldn’t you have done it?

Aaron: I would have definitely done it, and what is the most popular way to pump the price of your Shitcoin? [crosstalk 00:18:49] to be like, this Shitcoin is gonna have another Shitcoin coming real soon. I don’t think this is a Korean thing, particularly. This particular story takes place in Korea, but the human impulse is to do it, so my question is, was this intentional? Did they exchange … there’s a lot of very, very sophisticated traders in Korea, clearly. Did they look at how volume was playing and sort of know as long as we keep these promotions alive, we can hold this 6,000, then let’s get out-

Jay: Why wouldn’t they just get out with that, then?

Aaron: Well, because they made a bunch of money during that time by having all the volume and they knew that Bitcoin wasn’t about to drop and then they could have shorted it. There’s all sorts of ways they could make money-

Jay: Yeah, that’s true.

Aaron: … if you knew Bitcoin was gonna break 6,000, you’re in a great position as a trader.

Jay: Let’s think of the possible explanations. The most simple explanation is that they were like, “Wow. Bitcoin is really not doing well and people are turning off of it, so how do we keep people on our platform?”

Aaron: Yeah, what’s worked before? Airdrops.

Jay: Yeah, Airdrops and free money. It’s like if you go to New Jersey right now and you sign up for one of these … there’s a lot of different companies that are competing to own the online sports betting in New Jersey, which is now illegal, and they have figured out, I think … and this is smart … that the things that appeal to people who are more seasoned gamblers like myself, which is-

Aaron: I think the technical term is degenerate.

Jay: Yes, the more experienced gamblers like myself care that the thing that we don’t like about the New Jersey gambling system right now, is that almost every single place has like a 15% vig.

Aaron: 15%?

Jay: Yeah, it’s very high. Very high, so you’re minus 115 on most even bets.

Aaron: Can’t you just own the market by coming out with a 10% vig?

Jay: No because I think what they’ve done instead, and I think there’s a lot of reasons why they’re doing that in the first, is probably just the extremely high cost of licensing, I think. Instead, they’ve just been doing these incredibly good bonus giveaways.

Aaron: So you get some of that 15% back in the form of free money?

Jay: Let’s say that you go and you deposit $200 on the Fanduel betting app, which is a very well-designed and easy to use app. You immediately, I think, get $200 added to your account.

Aaron: This is where I thought the story was going in the first place, which is, even more simplified, not even sports bucks. Casinos, anything. What’s the best way to attract gamblers? Give them money to gamble with. Anyone who thinks they’re starting with any free asset, is so likely to gamble. A lot of those people probably came for the free giveaway and then bought Shitcoins. To get peoples’ butts in the seats, here.

Jay: It’s like the oldest tradition in casinos on the east coast is that you go down to Port Authority and you take a bus to Atlantic City, and when you get off the bus, they give you a voucher that’s worth $25. Your bus ticket was probably $22, but you can only use that voucher to gamble. So you go in there and you pump it in a couple slot machines and you get the fuckin’ juices primed.

Aaron: That shit’s gone like, 10 minutes after you arrive anyway.

Jay: There was one time when I won $150 on that voucher.

Aaron: The other thing is, even if somebody uses one of your vouchers and hits on the slots, if that was right when they arrive, that money’s going back in their pocket anyway. Nobody hits a slot at the start of their time at the casino [crosstalk 00:22:38] and goes home.

Jay: It’d be terrible anyways, you’re gonna end up spending like five hours on a bus. But I imagine that’s what they were doing. They saw that maybe things weren’t going very well and they wanted to stave that off for a while. Now whether or not that was a conscious decision to manipulate the price, I have no idea. It probably factored into their thinking some. But I think the major reason was probably just like, were losing this many customers a day, which I imagine was a lot. And all these accounts at least have gone inactive, how do we get them back actively trading again? You give them free coins to trade.

Aaron: I take your point that in the exchange business, the exchanges are gonna keep making tons of money as long as the crypto business continues. Regardless of what they crypto price is, what the popular coins are, none of that shit particularly matters if you’re running a Bithumb, or a Bitfinex, or particularly like a Bitmex that almost does better if there are these huge crashes because they have this huge amount of shorters who are using the service.

Aaron: But I have a hotter take for you. Here’s my hot take. This is a very petty, small example. Airdrop Festival. What if the entire Shitcoin market during the last couple years of crypto, was all one giant Airdrop giveaway designed to bring interest into crypto that pumped up the price of Bitcoin? There was all these gamified ways to trade Shitcoins to build Bitcoin, which is what everyone’s basically trying to do-

Jay: I don’t think that’s true, but keep going-

Aaron: … And to build volume, to build new people who are interested in crypto, who are using it every day, going on the exchange, I’m not saying this is a conspiracy, but I’m saying looking back, that was the net effect of everything below Ethereum. Almost all of this stuff, what it’s really done, is created trading volume and interest and given people Airdrops so they keep coming back, and that Airdrop ends up being a little bit of free Bitcoin and all this is priming the market for that huge run of Bitcoin. Now we’re dropped back down because it was all just Airdrops, [crosstalk 00:25:07].

Jay: … Like a Fork is basically an Airdrop, right?

Aaron: Oh, sure. Forks, Airdrop, new coins, new projects, call it what you will, it’s all like a door special to get people in the building on some level. It creates volume.

Jay: I don’t think that’s even a hot take. I think that’s just right. Nobody knew what any of these projects were, we didn’t. Anything that was gonna be free or cheap, we were gonna buy. That was gonna generate volume for that exchange, and that exchange was gonna take a certain percentage of whatever’s transaction that we made and they were gonna build some sort of user base, which, God knows for whatever reason. I think you can actually see that in the difference between the way that Coinbase did businesses and something like Bittrex and, what’s the one that you were on all the time? Cryptopia did business. Where I’m sure that in retrospect, Coinbase wanted to keep it to three coins for a number of reasons, but I think mostly because they wanted to vet the projects. They didn’t want to be stuck with a bad reputation because selling air or false projects. But now that they’re expanding a lot, it seems like they’re probably doing that because they want to capture some of that volume because the number of people who are just coming on to buy Bitcoin, I’m sure has severely, severely dropped.

Aaron: Coinbase is essentially a startup. And it’s a startup that you could argue is more successful than the asset that it’s built to top. It’s a great, great product and products like Coinbase are measured in their daily active users, their monthly active users, the amount of stuff people are doing on them and I don’t think Coinbase ever could have been happy with just Bitcoin. It wants people doing stuff every day.

Aaron: This is how people in northern California think about the problem with technology and how to make a lot of money with it, and that was never gonna happen if we just live in a Bitcoin maximalist universe. It has to be that, like, Ethereum amusement park plus. Did you see the stuff about how they’ve added the ZRX instant swap so people … it’s basically creating infrastructure for an entire ecosystem that’s supposed to have hundreds of different inputs, I would think. Ultimately, which is, I would say a bigger win for Coinbase, but it’s pretty different than what it started as.

Jay: If Coinbase started doing these types of Airdrop festivals … because right now, their reputation is not good, but if you look at the actual product, it’s pretty reasonably safe. It seems less scammy than KuCoin, for example, where I couldn’t read half the words that were on my screen at any given point. There all these pictures of presents and stuff like Christmas trees on the site.

Aaron: I feel like a good line is, “Does your site have a picture of a present on it?”

Jay: Exactly.

Aaron: Camp A, Camp B.

Jay: Or Christmas lights around Christmas time with something in Chinese that says, “Here’s the Airdrop Festival.”

Aaron: I would say that we could even draw the line as, things that have given away things and things that haven’t given away things.

Jay: Let’s say Coinbase does their own version of BNB, the finance coin. And they’re like, “We have created our own cryptocurrency, and here’s like-”

Aaron: I mean, they did create a stable coin.

Jay: Sure. But let’s say that they create a whole other currency [crosstalk 00:28:46] and they give you a whitepaper and they say this is why this cryptocurrency is important and here’s $50 free of Coinbase token, whatever you want to call it.

Aaron: And you’ll get another 50 for each friend you invite.

Jay: Yeah, Coincoin, or whatever you want to call it.

Aaron: I’m going for Coinbase Dust. CBD.

Jay: CBD. Remember Mark Cuban crated that social network called Dust?

Aaron: I don’t remember. I think he was just an investor in that. He was shelling it hard [crosstalk 00:29:16].

Jay: I downloaded it because he was saying he was gonna release all information about the [navs 00:29:23] on Dust. He was gonna give out his press releases on Dust.

Aaron: I feel like Mark Cuban was like a Crypto Dude before crypto. I think he doesn’t actually like crypto, but he is like similarly aggro. I could totally see Mark Cuban arguing with many, many crypto celebrities on a stage.

Jay: I think the reason he doesn’t like crypto is because he’s like, “They’re taking all my tricks. They just took my playbook. They made so much money off of it while I’m stuck here trying to build this basketball team and I have to go on Shark Tank all the time.

Aaron: He got Luca, he can’t complain.

Jay: Yeah, he’s doing good now. Okay, so if they did that and we don’t have to say that they had pictures of presents on the Coinbase website, but if Coinbase has an Airdrop of this thing and they advertise it, and you get free Coinbase, Coincoin or CBD, whatever it’s called, would you go back on? And would you sell that stuff? Would you trade it? Would you be a more active Coinbase user than you are right now?

Aaron: Here’s what I would do. If Coinbase gave me Coinbase gratitude coin, I would immediately sell it at market for Bitcoin and leave that Bitcoin in my-

Jay: So you would do a transaction, though?

Aaron: Yeah, and I think that’s notable because that’s basically … remember I had that coin XSN, I think, and it … no, it wasn’t XSN. I had some coin that it wasn’t even an Airdrop, it was a quasi-Fork situation. I basically somehow got another coin.

Jay: Oh yeah, yeah, I remember this, yeah.

Aaron: A few of the listeners to the show can probably remember, I think I’ve talked about it on the show. I sold it immediately for Bitcoin, so what you could say, ultimately, is that I just got a little tiny bit of free Bitcoin, right? That would be the case if you gave me this Coinbase thing and I traded it for Bitcoin.

Aaron: But the interesting thing there, is like, what’s really happening is some free Bitcoin is being issued to you, but you have to buy it. It doesn’t get issued to you, you have to trade and buy it, which I think creates volume and positive pressure on Bitcoin itself. Having all of this down market slop that’s running into the gutters and flowing slowly into Bitcoin, I think is maybe part of what we saw with Bitcoin.

Jay: Yeah, and I think if they actually did that, there would be some economy like there is for BNB around that token, itself, too. But I think the most important thing if we’re putting ourselves in the Silicon Valley mindset that you talked about, as a no-coiner for several months, I didn’t open Coinbase for months.

Aaron: Why would you?

Jay: Why would I? I had no coins in it and I was more or less uninterested in what the price of Bitcoin was. If I had gotten free Bitcoin just to sell it, then I would have sold that off into Bitcoin, and then I would have been interested in the price of Bitcoin. Then whatever addictive personality degeneracy that I have-

Aaron: You’d be hooked.

Jay: … Would start going in and I’d start having thoughts like, “Ethereum’s down to like, $86. Maybe I should also buy a little bit of Ethereum.”

Aaron: Why not?

Jay: Yeah, then I have in two months mortgaged my house and taken out my daughter’s college fund.

Aaron: I think this is … I think we’re kinda onto something here a little bit. Crypto only has one usable product right now. There’s only one fun thing to do with crypto. That is to buy it and to sell it and to look at the price and play the gamified trading game. All of the other crypto products don’t really work at this point. The only thing that keeps the active base of crypto users up is trading being fun and interesting. It’s a weird thing, I sort of believe in Bitcoin maximalism, which is to say the only one of these assets I actually believe in is Bitcoin in the long run. But, it does feel like, from a user perspective, at least in that Silicon Valley mindset, they need all that training. They need that Altcoin market or it’s dead. Just from a pop cultural and things to actually do that are fun [crosstalk 00:33:51].

Jay: Let’s say one of us is a bookie or running a casino.

Aaron: Theoretically, you.

Jay: And for whatever reason, I as Jay the bookie, have hit an amazing streak where all of my customers are on one side of every game and they lose, and I’ve basically bankrupted my customers, which is-

Aaron: You mean all profits, no payouts?

Jay: Yeah. Which is not what bookies try and do. I know this, so please don’t write in to the show, but it is not a bad outcome for that.

Aaron: I’m not theoretically a bad bookie, okay?

Jay: Yeah, or delusional about what lions are. But, at that point, you have a bunch of people who are probably stopping betting because they’re broke, so if you give them a free bet, then they’re gonna come back and make that free bet. Some percentage of them will win and cash out, although I think that’s a very small, small percentage. But most of them will either lose and get back into gambling, or they’ll win and double-down and gamble again. So they just start-

Aaron: I think you just described the loan shark [crosstalk 00:34:55]. A free giveaway is given, but you have to give it back.

Jay: Yeah, I know, but that’s what I mean. What we’re basically describing here, it seems like what Bithumb did, and what we both agree that maybe some exchanges should do in America, is that they’re acting like a bookie who’s giving out, or even like a drug dealer who’s giving out a little bit of the product just to get people hooked again.

Aaron: First time’s free, baby.

Jay: You know who else does this, by the way?

Aaron: Who?

Jay: Robin Hood does this.

Aaron: Yeah.

Jay: When you sign up for a Robin Hood account, and I cannot believe that this is legal, or that this passes regulations, but if you sign up for a Robin Hood account and you refer a friend, they give you a free stock [crosstalk 00:35:42].

Aaron: … $3 or something like that.

Jay: No no no, it’s like a lottery, so your one free stock could be Apple or Amazon or something like that.

Aaron: I see this all the time because I get push notified for that stock, and I’m like, “What is that?” Then I’m like, “Oh yeah, that’s my free Robin Hood stuff.”

Jay: I got like Chesapeake Energy or something like that, that was like $3, or Sprint, I think I got, too. They are clearly doing that because they’re just seeding the pot. It’s really not hard for them to give out one $3 stock. You see that stock go up and down, up and down, then you get hooked into the action of it, then you want to do more-

Aaron: Is it possible that Crypto Dude stole it from Mark Cuban’s swag and then Robin Hood just stole Crypto’s style trading and just applied it to the stock market at this point?

Jay: Yeah, and they all took it from drug dealers who give out a little [crosstalk 00:36:39].

Jay: So, I think we’ve cracked the case now. That Coinbase should act more like a drug dealer if Bitcoin’s price wants to go up.

Aaron: I think you’re right. At this point, people should be doing more to manipulate the price of Bitcoin. C’mon.

Jay: Yeah, just do all sorts of crazy shit.

Aaron: Like get a fucking Super Bowl commercial for Christ sakes.

Jay: Where’s the Coinbase Wheel of Fortune game? I would play it, wouldn’t you play it?

Aaron: Yeah. Or someone needs to do an Airdrop Festival Super Bowl ad.

Jay: Oh my God that would be great. Someone should launch an exchange where you get some sort of seating thing and if you take your funds out of Coinbase and they can tell that it comes from a Coinbase holding lot-

Aaron: Ooo. I like where you’re going with this, where you start at the company that if you move your Bitcoin from Coinbase to us, we’ll give you this super secret one-time coin, it’s only on Super Bowl Sunday.

Jay: It’s like the credit card companies, it’s what they do, right?

Aaron: Yeah. They give you all kinds of crazy shit. Think about how much credit card companies are trying to juice the market. They’re like, “Okay, we charge fees, but we’re actually gonna give you more than that amount back and a bunch of airline miles, and if someone steals this, we’ll cover your loss just because we need daily active users on our shit. And when this system’s pumping, we’re making tons of fucking money, so let’s keep doing it.” That’s what all these exchanges need to do.

Jay: Yeah. I agree. I agree. I think that we’re in agreement that crypto needs to become scammier.

Aaron: Is there anything else we should cover this week?

Jay: Well what else is going on in the news?

Aaron: Well I did notice that your perspective changed almost instantly, once you became a coiner again. Because you were like … you posted something that Bitfinex posted that … oh, I will say that the one upward bounce was still accompanied by potential tether printer action. I know Ledger tells me I’m fighting when I say that, but someone posted that [inaudible 00:39:06] you were like, “That guy needs to shut up,” I was like “Oh, Jay has coins again.”

Jay: Also, the last 10 minutes of this show where I’ve been encouraging Brian Armstrong to make Coinbase scammier so that the price goes up.

Aaron: Yeah, you got real self-righteous as a no-coiner and the minute you had like point three Bitcoin, you were like, “Whistle blowers should be shot.”

Jay: What’s he doing? Yeah, look, it’s not a very complicated psychology going on here. It is just self-interest but I dunno, I’m actually glad that I’m back in coinland because even at this very small level, because it is a lot more fun to have crypto-based conversations with coins.

Aaron: Well, it’s great to have you back. I’m gonna give you a hypothetical here, because I’m interested in how you’re viewing this market.

Aaron: If Bitcoin goes up, will you buy more?

Jay: No.

Aaron: And if Bitcoin goes down, will you buy more?

Jay: I think that if there was a violent move down to, say, 1,800, I would probably buy more. The reason I would do that is because I would be doubling down and I would be saying … this would be the calculations in my head and this is not financial advice. And second caveat being that I have a gambling problem, so-

Aaron: Your whole life’s one big Airdrop festival.

Jay: God, I wish.

Aaron: Can we make Airdrop Festival t-shirts? I think I love the name of our conference being Kang-Con, but I’d say if we called it Airdrop festival, that’s also a strong second. Or maybe Kang-Con: The Airdrop Festival.

Jay: Yeah, we just need a subtitle.

Jay: The reason why I would do that is because I think the best case scenario right now is that if you look at any type of market cycle, that we’re in the right hand part of that. We’re in the shit. At some point, because it is called the cycle, it goes back up and I think that any chance that you have to catch it anywhere near the bottom is going to be the most profitable way to do it. The risk, obviously, is that we have no idea what the bottom is. This is the same mentality, I think, that some of our friends who have been pushing us to invest in uranium stocks have, is that uranium is so ranked, it must be at the bottom of the market cycle.

Aaron: I feel like it’s down like, 20% since that stance.

Jay: One of mine is down much more than that. Are you [inaudible 00:41:43] but to be fair to our friend who has been pushing us to buy uranium stocks, the entire market has crashed, so it’s hard to tell-

Aaron: Yeah, that’d be the same thing if you bought [Fang 00:41:54].

Jay: Yeah, exactly. If you had bought Netflix or Activision, you’d be more wrecked than uranium. So, you kinda want to catch the bottom. You don’t know if it’s the actual bottom, but you can kind of make guesses that we’re close to it. I think if we were at 1,800, I’d be like, “Well, I dunno. How much more could it possibly go down?” Does that mean that I’m basically where you were at when it was at 6,000? When you were like, “How much more could it possibly go down?”

Aaron: I think I said that at like, 12,000, probably.

Jay: You definitely said that at 9,000. You were like, [inaudible 00:42:29].

Aaron: Jay, that’s mathematically impossible.

Jay: Yeah, for there to only be four numbers. Must be five numbers.

Aaron: If it goes up to 4,500 tomorrow-

Jay: I’ll sell.

Aaron: Really?

Jay: Insta-sell, yeah.

Aaron: Because you will feel like you’re no longer buying at the bottom or because you will think it’s gonna crash back down?

Jay: My suspicion would be that it would crash back down.

Aaron: What would make you think, “Oh no. The next bullrun is here,” and not, “Oh, it’s gonna crash back down.”?

Jay: If it went to like, 6,000 and that’s when I would probably buy again.

Aaron: Okay, so on some sort of a bull confirmation, you would buy again?

Jay: Yeah, but remember, this is how I lost so much money trading on the way up. I kept exiting and then it would go up 20 more percent, then I would get furious and then I would buy it back again.

Aaron: You’re like a cat that wants to go outside, then it wants to go back in, then it wants to go outside and it’s always scratching at one side of a glass door.

Jay: Yeah, that is me. That is me. I’m glad that behavior which I had basically canceled out of my life by not being in crypto is back.

Aaron: Any other final thoughts?

Jay: No, well how about you? How do you feel about it? I know that your general response is, “I’m already all in. I can’t buy any more.”

Aaron: That is true. I’d say the scariest thing I’m doing, I have a dark confession to make, which is I got sucked into … I was on our Twitter account posting our episode and [inaudible 00:43:57] hour and a half TA thing came up and I just … I don’t know about you, but I cannot take my eyes off of this stuff right now. I just sat there and watched the entire thing of him just like-

Jay: An hour and a half?

Aaron: I watched it for way too long. He had another guy on-

Jay: Did you learn anything?

Aaron: Actually, I learned a lot. The scariest thing I learned is that basically … so Ethereum bottomed out, hit I think like 85, maybe it was 83 for a second, but they were … basically, below that, is nothing. There’s no support for Ethereum under that.

Jay: So they feel like it could go-

Aaron: It could go to like $15.

Jay: Wow. Do you have Ethereum?

Aaron: Like a third of my portfolio is Ethereum.

Jay: Oh no. Why wouldn’t you not sell?

Aaron: Because it’s at an all-time low against Bitcoin right now. I wouldn’t sell because I’ve been buying it on the way down. My strategy was to wait til both recover and I feel like it’s eventually gonna recover more than Bitcoin, but there’s definitely more stops along the way. I think the overall story of what I’m saying here is, comparatively, Bitcoin is not as wrecked as the rest of this shit yet.

Jay: Well, okay, yeah, but it’s still completely wrecked.

Aaron: No, but that’s kinda makes me a little worried about 1,800. Bitcoin has emerged a little more unscathed and there’s a little bit more confidence in Bitcoin.

Jay: But that’s for good reason, though.

Aaron: I agree.

Jay: Would you buy at 1,800?

Aaron: Bitcoin?

Jay: Yeah.

Aaron: Literally all the money I have to put in is in.

Jay: You wouldn’t mortgage anything or sell your car?

Aaron: No. Someone hit my car. My car is worth, even at this low, less than one Bitcoin.

Jay: I don’t think that’s true.

Aaron: Really?

Jay: I think you’re car’s worth like 1.5 Bitcoins.

Aaron: Jay, that is a 2004 Toyota Matrix.

Jay: Okay, yeah, maybe it might be less.

Aaron: I will sell it to you for one Bitcoin right now.

Jay: That’s true, okay then. I didn’t actually know it was that old. It probably isn’t worth one Bitcoin. Would you trade your car for one Bitcoin right now?

Aaron: Sounds like it’s a good game show. You get people off the street who don’t know the price of Bitcoin and you say, “Would you trade your car for one Bitcoin?” And they can’t look up the price of Bitcoin?

Aaron: Alright, what do you say, for our next episode, or sometime soon, should we do another deep dive?

Jay: Yeah. Yeah yeah yeah, let’s-

Aaron: I think the one I’m most excited about … we often do deep dives as coins get opened up to Coinbase. I feel like it’s a little bit of a … alright, it’s been validated, at least. Is this legit enough to spend the 17 minutes we do researching the coins for these deep dives, which are neither deep, nor dives particularly.

Aaron: I say we do Decentraland and their token Mana, which I think Coinbase, was one of the 31 coins they said they were exploring.

Jay: Okay, yeah, Decentraland is … I think we talked about it on the show before.

Aaron: Yeah, we had Tony Sheng on the show and he works at Decentraland, it’s like a virtual world. I think it has different districts, there’s one that’s like an AR district or they’re building. People buy land in it, I guess Mana is the token and there’s a fund that I understand, is investing in items and things built within Decentraland.

Jay: Maybe we can … much like we built Augur Market, maybe we should buy a-

Aaron: Ooo. Should get ourselves a little plot?

Jay: Yeah, we should start homesteading on Decentraland.

Aaron: I dunno, do you think we can afford a plot?

Jay: We’re gonna have to figure it out, but I think so.

Aaron: Do you think the plot costs more or less than my car?

Jay: The smallest plot [inaudible 00:48:07]. That’s what you should do.

Aaron: Maybe we should set the standard of we should sell my car and buy whatever land we can get with it.

Jay: Or we’ll just put out an ad on Twitter, it can be like, “Will trade Aaron’s car for land in Decentraland.”